This is probably a really stupid question and I think I know the answer but I've thought about it so long that I've confused myself. In July we will have a extra $500 a month (in the grand scheme of things that isn't a huge amount but it's something. ). We just bought a new Sequoia and have paid most of it off however I'd like to have the entire thing paid off by next summer. So, do I add that $500 extra to the principal each month or do I put it into my savings and pay it off in one lump sum? Is there an advantage to paying it month instead of one lump sum? I was under the impression I should do it monthly to save on interest (which is only 4%) but then my friend and I were talking and she said "No, the interest is already added in for your entire loan so I'd just make one lump sum. " So now I'm super confused even though I think I'm right, can someone confirm?